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FTC sanctions behavioural ads firm over deceptive 'opt-outs'

Sing a new song, Chiquitita Chitika

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The FTC has settled a complaint with a behavioural advertising firm alleged to have misled consumers into believing they had opted out of its services.

Chitika uses cookies to track surfers' actions on the web as well as the searches they make in order to serve them with ads that more closely match their perceived interests. The firm's privacy policy states that it allows web users to opt out of receiving cookies or receiving targeted ads.

However, according to the FTC complaint, from at least May 2008 until February 2010, users who went to the trouble of going to Chitika's website and opting out were only excluded for 10 days. After that time, Chitika would begin using cookies to serve them with targeted ads all over again, contrary to their clearly expressed preference.

The FTC launched a complaint against Chitika on the basis of its investigation, arguing its "opt-out mechanism was deceptive and violated federal law". Chitika has agreed to settle this complaint, on a no-fault basis, with a promise that it will provide a much clearer opt-out mechanism that it will honour for at least five years. The firm also agreed to get rid of user information harvested during the period of its previously ineffective opt-out as well as refraining from making statements on its privacy policies that might be construed as misleading.

Breaches to the agreement, which strengthens the FTC's hand in case any further legal action is needed, are liable to lead to fines of $16,000 per incident, as explained in an FTC statement on the settlement.

Bootnote

Chitika, means “snap of the fingers” in Telugu (a South Indian language). So, slightly disappointingly, the name of the firm is not a tribute to the similarly sounding song Chiquitita, by 70s Swedish pop legends ABBA.